Health insurance expenditures in the United States have increased enormously over the last 50 years. Understanding why expenditures are rising and the potential for different kinds of insurance reforms to limit expenditures have become crucial policy issues. The provisions of employer plans-which cover almost two thirds of Americans under 65--vary a great deal from firm to firm and so do the costs of medical care under these plans. Thus firms provide a unique opportunity to understand the relationship between plan provisions and expenditures for health care. A unique file of claims data makes this possible. The core aim of this sub-project is to determine the effect of employer-provided insurance plan provisions on medical expenditures. The goals are: (1) To describe and quantify the sources of the differences in health care expenditures among firms. (2) To understand the determinants of employee plan choices. (3) To isolate the effects of plan incentives from the effects of self-selection of plans, and thus to evaluate the potential for plan provisions to influence medical care use and expenditures. (4) To understand the implications for medical expenditures of various health insurance reforms, including HMO plans, other managed-care options, and medical savings accounts.